While you have some time away from the pressures of the day-to-day running of your business, it is good to think clearly about your important business numbers and consider which areas of your business you can improve upon in 2022.

I want to emphasize, yet again, how important it is to understand and monitor all the numbers in your business. It’s vital if you want to continue increasing your productivity and run a successful, results-oriented business.

You have nothing to guide you if you don’t know and understand your numbers before making decisions. Your choices will be based on guesses and emotions, not data and facts.

It doesn’t matter whether you are ‘good at this sort of thing. It would be best if you did it. It is non-negotiable.

If you have a financial background, love spreadsheets, and know your way around a balance sheet, you can handle this side of things yourself.

But if you need help counting past 14, don’t think you are off the hook. Knowing your numbers is just as crucial, but you will need help. It can come from somebody inside the business who can crunch the numbers for you. Or somebody outside the industry, such as an accountant or business strategist, understands your strategies and goals.

If you want to be sure that all your decisions are strategic rather than just being made on a hunch, you must know your numbers and understand which are most vital to your decision-making.

One of the critical areas of business that many business owners need help understanding their numbers is marketing. Many companies begin marketing simply because they ‘want to get out and do things.

It provides a brief illusion of success because spending money on marketing can result in more customers coming to your door. What it will not do is give the right customers that are essential for long-term growth in productivity and profits.

So, let’s look at this from the perspective of marketing. What are the most important questions to ask first? Are they:

• How many customers are you trying to acquire? No.
• How much profit are you trying to generate? No.
• What shiny new product are you trying to promote? No.

All your marketing options will develop from these questions:

• How many new customers do you need?
• What is your conversion rate?
• What is your cost per lead?
• What is the lifetime value of each customer?
• How can you improve the conversion rate and lifetime value because those two aren’t expensive?

You must start with these questions to develop a long-term, sustainable marketing plan. Simply throwing money at marketing (or anything else) is no good. It may get short-term results, but it will cause long-term problems in the business. This approach is outcome-based and well-thought-out and therefore needs to be more sustainable.

With finances, you must understand it comes down to first what and then how.

Management will always make decisions that lead to activities and give results. These results are needed to measure the success of anything you do in your business and accounting and compliance.

But, most importantly, these figures are needed for your day-to-day understanding of whether you are on track and how you are trending.

They need to be measured for business intelligence. You need the data to assess your previous decisions and to inform your subsequent choices.

If you don’t know what’s showing up, you have no basis for making or evaluating decisions.

Consider whether you need to understand your numbers better.

If you need to improve in this area, consider how you will improve. As with everything, you can only wish and hope with a strategy.

So I hope this has got you thinking about how you can improve your strategic thinking. As you think about your strategy going forward, please check out our podcast, where I discuss ways to improve your business.

Knowing who you should be serving is the foundation of your business and is vital to developing a strategy for long-term success.